Essential Challenges of Strategic Management

Posted on November 16, 2009, 2:21 pm, by Bill Rouse, under Challenges.

After working with well over 100 enterprises – large and small companies, government agencies, non-profits, and universities – it should not be surprising that I came to wonder about common challenges across all these types and sizes of enterprises. Pursuing this idea, I identified seven challenges.

Growth is the overarching challenge. How can your enterprise increase its impact, perhaps in saturated or declining markets? For an enterprise to prosper, growth must be your goal. Whether the metric is revenue, profit, market share or lives saved, any goal other than growth will eventually lead to decline.

Addressing the challenge of value provides your foundation for growth. This involves enhancing the relationships of your enterprise’s processes to benefits and costs. This requires a solid understanding of the nature of your processes, the stakeholders in these processes, and how these processes provide benefits and incur costs.

Success in pursuing the challenges of growth and value, requires addressing the challenge of focus, which provides your path from value to growth. Focus involves pursuing opportunities and avoiding diversions. It involves reducing or eliminating investments in your old value proposition to invest in the new.

The challenge of change requires that you design the new enterprise for the pursuing the path from value to growth. This design or redesign should balance competing creatively while maintaining continuity with those aspects of the enterprise you want to preserve. If you have to change everything, then liquidation may be better than transformation.

Change almost always involves investing in inherently unpredictable outcomes in the future, the fifth challenge. Articulating your view of possible outcomes and the uncertainties associated with them is key to both your commitment and that of your team. Keep in mind that many these uncertainties and associated risks cannot be eliminated. Your goal, therefore, is to be better at risk management than your competitors.

By addressing the challenge of knowledge, you can gain the means of transforming information to insights to programs of action. This involves understanding the nature and role of knowledge in your enterprise. Much of this knowledge will not be archival. Instead, it will be in the heads of the people in your enterprise.

The seventh challenge is time. This challenge involves carefully allocating the organization’s scarcest resource – the time of the top management team, including you. This resource is much more scarce than money. Yet, executives and senior managers often waste their time on the urgent but unimportant quadrant of Stephen Covey’s matrix.

These seven challenges are discussed at length in Essential Challenges of Strategic Management (2001) published by John Wiley. In many situations these challenges can be addressed by improving one or more elements of the “as is” enterprise. In some cases, however, there is a need to fundamentally transform from “as is” to the “to be” enterprise. This is your ultimate challenge.

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Stories of Change

My focus in this blog is fundamental change. In particular, I will write about fundamental change of complex organizational systems. The series of entries will report on a 20-year journey working globally with well over one hundred enterprises and several thousand executives and senior managers. I will also provide observations and comments on contemporary news and events.